American Oil and Gas Reporter - January 2015 - 198

The Presidential Papers
pursue activities and actions that protect
the environment while allowing the industry to operate effectively and transparently. To provide additional data and
assurances to landowners, policymakers
and the public, the NMOGA Board of
Directors supports voluntary water well
testing before and after hydraulic fracturing
operations. Although the industry's record
on safety and environmental protection
in hydraulic fracturing is exemplary, voluntary testing provides additional data.
Water issues are especially important
in New Mexico's arid climate. Even though
hydraulic fracturing accounts for less than
0.25 percent of the state's freshwater use,
companies have made great progress in
reducing freshwater use for hydraulic
fracturing both by using produced water
and reusing flow-back water. These efforts
increasingly are creating a win/win situation
by freeing freshwater for other uses, such
as municipal consumption and agriculture,
while reducing costs associated with freshwater purchase and transport.
To provide for regulations that enable
and support produced water use, NMOGA
has filed for a rule making with the OCC.
This important rule is supported both by
the industry and by state officials as the
next necessary step to encourage and
support more produced water use for hydraulic fracturing. Hearings on the proposed rule will begin in 2015.
New Mexico's oil and gas industry is
an especially important part of the state's
economy. The industry supports well
more than 100,000 jobs. In 2013, industry
taxes and royalties provided more than
$1.7 billion, which accounts for 31.5 percent of New Mexico's $5.6 billion general
fund revenues. In addition, revenues from
the oil and gas industry have provided
the majority of funding for the land grant
permanent fund, severance tax bonding
fund and severance tax permanent fund.
In an environment with lower oil prices
and relatively stable natural gas prices,
the issue of where and how much companies invest capital in drilling and exploration becomes much more important.
Whether the price environment will slow
drilling activity or merely reduce the rate
of growth remains to be seen. Regardless,
there are significant resources and opportunities in both of these areas that
will serve the industry well for years,
decades and-who knows-even centuries
into the future.
Ì

North Dakota
Petroleum Council
W. PERRY PEARCE
Manager, State Government Affairs,
Rocky Mountain Division
ConocoPhillips
Denver

FROM THE CHAIRMAN
For more than 50 years, geologists
and oilmen eyed North Dakota, seeing
within it promise and potential. That
promise and potential lay almost two
miles below its surface within the stubborn
Bakken Shale formation. For 50 years,
wildcatters worked to bring North Dakota's
oil reserves to the surface. In 2006, they
succeeded, and that promise and potential
has since transformed North Dakota into
a state of prosperity.
What followed now is history. The
rapid growth and rural economic resurgence is nothing short of astounding.
Few, if any, could have predicted the success of the Bakken Shale and the sheer
magnitude of changes it would bring.
Workers came to the state in droves,
available housing became scarce, and
roads that once saw a dozen cars or fewer
become congested. From 2008 to 2013,
the prosperity continued, but it was perseverance that defined those years as the
state and western communities worked
to keep pace with the record growth.
Persevere they have, and this past year
has been marked by a number of milestones that can sum it in one word:
progress. From expansions in natural gas
plants to ribbon-cuttings for bypasses,
western communities and the industry
have celebrated significant milestones in
the state's journey toward a better future.
For the industry, the challenges have
been many. We began the year charged
with the task of reaching aggressive
flaring reduction goals. The NDPC Flaring
Task Force worked diligently for much
of 2013 to identify bottlenecks that were
hindering gas capture and to present a
plan to the North Dakota Industrial Commission for connecting more wells.
Arriving at a consensus on these kinds
of issues is neither easy nor clean, but it
was an effort that is largely unprecedented

198 THE AMERICAN OIL & GAS REPORTER

for our industry. Working together, we
came forth with a set of recommendations
that have been adopted and more importantly, opened lines of communication
among the upstream, midstream and service
contractors. This has allowed us to be
better partners. The work by the task
force, in addition to the increase in gas
plant capacity, has helped us stay on track
for reaching our flaring reduction goals.
Another key project this year for the
NDPC has been a comprehensive study
of Bakken crude characteristics. The study
is the most comprehensive of crude characteristics for a shale play to date. This
information not only will be incredibly
useful to shippers in ensuring the proper
handling and transport of Bakken crude,
but it is also a standard for the crude that
may pave the way for a Bakken benchmark.
Road Concerns
There have been many other key regulatory issues that NDPC focused on over
the course of 2014. One concern that often
has beleaguered the industry and western
communities, however, is roads.
This is an area where the state is finally
making tremendous headway. The Alexander, Watford City and New Town bypasses
all have been completed, bringing relief
to those communities to really focus on
community improvement projects. The
four-lane highway from Williston to
Alexander has been a big step toward improving traffic along that stretch.
There are still many issues related to
county and township roads that the industry
and local governments must work together
to resolve, but these major projects are
visible reminders that perseverance will
pay off.
Many North Dakota communities, including Alexander, Watford City and

American Oil and Gas Reporter - January 2015

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